Featured Company News – D.R. Horton and Forestar Group Sign Confidentiality Agreement

LONDON, UK / ACCESSWIRE / June 12, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Fort Worth, Texas based D.R. Horton, Inc. (NYSE: DHI) and Forestar Group Inc. (NYSE: FOR). D.R. Horton announced on June 09, 2017, that it has signed a confidentiality agreement with Austin, Texas based Forestar. The purpose of the confidentiality agreement is to exchange information as well as discuss D.R. Horton’s proposal to acquire majority stake in Forestar. On June 05, 2017, D.R. Horton had sent an unsolicited proposal to acquire 75% stake in Forestar by offering $16.25 per share in cash. For immediate access to our complimentary reports, including today’s coverage, register for free now at:

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The signing of the confidentiality agreement does not guarantee that Forestar’s Board will accept D.R. Horton’s proposal or that it would make any changes in its existing merger agreement with Starwood Capital Group (“Starwood”).

Backdrop

Forestar, a residential and mixed-use development Company, had signed a merger agreement with affiliates of Starwood in April 2017. Starwood had offered to pay $14.25 per share in cash for all outstanding shares of Forestar. The transaction had an equity value of approximately $605 million. The deal was approved by Forestar’s Board of Directors and was expected to be completed in Q3 2017 subject to approvals from Forestar’s shareholders, regulatory authorities, and closing conditions.

However, before the deal could be completed, D.R. Horton put forth an unsolicited offer before Forestar’s Board on June 05, 2017. D.R. Horton’s offer was 14% higher than that of Starwood. It had the added attraction of continuing Forestar’s business without losing its identity as a publicly traded Company. Forestar’s shareholders would continue to hold 25% stake even after the completion of transaction with D.R. Horton. Also, D.R. Horton had put in place all necessary financing for the deal, if Forestar accepted the offer.

On June 05, 2017, Forestar’s Board of Directors had acknowledged that they had received an unsolicited offer from D.R. Horton. Forestar’s Board as a part of its fiduciary duties had agreed to consult with its financial and legal advisors to review D.R. Horton’s offer.

On June 08, 2017, Forestar’s Board announced that after consultation with its legal and financial advisors, it has concluded that D.R. Horton’s proposal to acquire 75% stake in the Company, could lead to a bid that is superior to its deal with Starwood and would maximize value for Forestar’s shareholders. With this purpose in mind, the Board had agreed to pursue further discussions/negotiations with D.R. Horton. The discussions with D.R. Horton are in-line with the procedures set forth in the merger agreement with Starwood. Forestar’s Board had suggested that the Company should sign a confidentiality agreement with D.R. Horton outlining the terms which should not be less favorable than Forestar’s existing confidentially agreement with Starwood.

About the two Companies signing the confidentiality agreement

D.R. Horton is engaged in the construction and sale of high-quality homes. It is one of the largest home builders by volume in the US for fifteen consecutive years. It is headquartered in Fort Worth, Texas and its operation spans in 78 markets across 26 states in the US. For the 12-month period March 31, 2017, the Company closed 43,075 homes.

Forestar is a residential and mixed-use development Company that owns interest in 50 residential and mixed-use projects comprised of approximately 4,600 acres of real estate located in 10 states and 14 markets as of end of FY16.

If the D.R. Horton/Forestar deal goes through, it would lead to a strategic partnership where both Companies could benefit from each other’s strengths and create great value for shareholders. It would also be interesting to know if Starwood would sweeten its existing offer by putting out a fresh offer to match or outbid D.R. Horton’s proposal.

Last Close Stock Review

At the closing bell, on Friday, June 09, 2017, D.R. Horton’s stock was slightly up 0.24%, ending the trading session at $33.62. A total volume of 3.40 million shares have exchanged hands. The Company’s stock price surged 0.15% in the last three months, 16.82% in the past six months, and 5.96% in the previous twelve months. Moreover, the stock rallied 23.01% since the start of the year. The stock is trading at a PE ratio of 13.08 and has a dividend yield of 1.19%. The stock currently has a market cap of $12.69 billion.

Forestar Group’s share price finished last Friday’s trading session at $16.30, marginally advancing 0.62%. A total volume of 2.12 million shares have exchanged hands, which was higher than the 3-month average volume of 894.37 thousand shares. The Company’s stock price rallied 25.87% in the last three months, 20.30% in the past six months, and 28.65% in the previous twelve months. Additionally, the stock surged 22.56% since the start of the year. Shares of the Company have a PE ratio of 8.11 and currently have a market cap of $667.48 million.

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